Examples of Inventory Tracking Procedures

by Shelley Frost, Demand Media

The selected inventory system depends on the type and size of your company.

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An inventory tracking system aids in purchasing, forecasting sales and preventing theft from employees or customers. The different inventory tracking options give you flexibility to find a system that works well for your business while fitting your budget. The type of business also plays a role in selecting the inventory system.

Tag System

A tagging inventory system is a manual process that uses actual tags to track movement of products. Each item has a price tag that is removed when it is purchased. The collected tags create your record of sales, allowing you to create charts or reports of your sales. The reports allow you to check the remaining inventory with the sales to verify accuracy. This option works best for smaller businesses with smaller sales volume because of the work involved in the manual system.

POS System

A point-of-sale system tracks products purchased at the cash register. This method is typically a computerized system that automatically tracks sales as items are scanned for purchase. The software records the sales, allowing you to generate reports with the information. This aids in determining the items that sell, the amount you still have in stock and what you need to reorder. Some POS software programs include additional financial tracking capabilities, including accounts payable, accounts receivable and purchasing for a centralized system. This option works well if you have updated cash registers that will work with the software.

Bar Code Scanning

Commercially packaged products include bar codes that offer an inventory tracking option. In this method, the bar code on each package is manually scanned with a handheld unit. The scanner corresponds with a software program to allow report generation. This method is faster than manually counting items or comparing the physical inventory to tags collected at the register. It does take time since each item requires individual scanning.

RFID

Radio frequency identification tracks inventory through a radio wave system. Tags on the products transmit to the reader device. The tag has the capability to hold a variety of information about the products. Because of the sound waves, you don't have to physically scan each item. The reader can scan multiple products at once, allowing you to keep products on the shelves rather than moving each one to reach the bar code. This speeds up the inventory process.

About the Author

Based in the Midwest, Shelley Frost has been writing parenting and education articles since 2007. Her experience come from teaching, tutoring and managing educational after school programs. Frost worked in insurance and software testing before becoming a writer. She holds a Bachelor of Arts in elementary education with a reading endorsement.

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